The power supply agreement, which has been repackaged as letter-agreement, entered into by the Power Sector Assets and Liabilities Management Corporation (PSALM) and National Power Corporation (NPC) with SPC Power Corporation (formerly Salcon Power) failed to secure the approval of the Energy Regulatory Commission (ERC) for the P3.00 per kilowatt hour (kWh) rate on the power supply being charged to covered customers in the Visayas.

SPC Power is the buyer of the 132-megawatt Panay-Bohol diesel power plants, which stands as NPC’s power supply source for customers which it is bound to supply power to, mainly private distribution utilities and electric cooperatives in the area.

NPC and PSALM, it was gathered, planned of invoking Default Wholesale Supply (DWS) arrangement as justification for the letter-agreement or supply deal it entered into with the Panay-Bohol plants’ buyer.

Under the agreement, NPC would have to pay SPC a fixed cost of P3.00 per kWh for power supplied by the latter.

In the deal, the state-run power firm shall also be in charge of providing the fuel that shall be utilized in the electricity that will be supplied to it; and that will come without cost to the privatized plant’s owner. Instead, it shall be charged as account to PSALM-NPC.

Under Section 47 (j) of the Electric Power Industry Reform Act (EPIRA) , NPC or its successor-company PSALM is already prohibited from entering into supply agreements (including variants)  thereof, with generation companies such as that of SPC Power.
Regulatory sources clarified that the DWS arrangement cannot be used as legal justification for Visayas or in the NPC-PSALM and SPC Power deal because the Wholesale Electricity Spot Market (WESM) in the area is not yet in operation.